3 Reasons Why Growth Investors Shouldn't Overlook Globus Medical (GMED)

Investors often turn to growth stocks with the hope of achieving returns that exceed the market average. However, identifying a growth stock that fully realizes its potential can be challenging.

Growth stocks are typically characterized by their inherent volatility and above-average risk. There is always a possibility of investing in a company whose growth period is nearing its conclusion.

Fortunately, tools like the Zacks Growth Style Score can simplify the search for promising growth stocks. This system evaluates more than just conventional growth metrics, diving deep into a company’s real growth potential.

One notable example is Globus Medical (GMED - Free Report), which currently stands out in our analyses. This company not only boasts a commendable Growth Score but also holds a high Zacks Rank.

Research shows that stocks with superior growth attributes consistently perform better than the market. Moreover, stocks that pair a Growth Score of A or B with a Zacks Rank of #1 (Strong Buy) or #2 (Buy) tend to deliver even higher returns.

Here are three key reasons why Globus Medical represents an attractive option for growth investors today.

Earnings Growth

Earnings growth is arguably the most critical metric for investors aiming for growth. Investors typically seek out companies demonstrating double-digit earnings growth, as this often signals robust potential for the future.

Globus Medical has a historical earnings per share (EPS) growth rate of 14.2%. However, what excites investors more is its projected growth, with an expected EPS increase of 28.4% this year, well above the industry average of 16.5%.

Cash Flow Growth

Cash flow is vital for any business, but for growth-driven companies, substantial cash flow growth is even more critical. High cash flow growth allows these firms to expand their operations without relying excessively on costly external funding sources.

Currently, Globus Medical is experiencing impressive year-over-year cash flow growth of 72.4%, significantly outperforming many competitors in its sector. For context, this figure stands in stark contrast to the industry average, which is negative at -4.9%.

It's beneficial to assess both current cash flow growth and historical trends. The company has demonstrated an annualized cash flow growth rate of 18.2% over the past 3-5 years, again surpassing the industry average of 5.4%.

Favorable Earnings Estimate Revisions

The strength of a stock can also be gauged by examining the trend in earnings estimate revisions. A positive trend is an encouraging sign for potential investors, as there tends to be a strong correlation between estimate revisions and short-term stock performance.

Recent trends indicate upward revisions in Globus Medical’s current-year earnings estimates. The Zacks Consensus Estimate for this year has increased by 4.7% over the past month, signaling growing confidence in the company’s performance.

Conclusion

In summary, Globus Medical enjoys a Zacks Rank of #2, underpinned by favorable earnings estimate revisions and a strong Growth Score of B. These factors, highlighted in this article, suggest that the company is well-positioned for growth.

This combination makes Globus Medical a compelling pick for growth investors looking for potential outperformers in the market.

Globus, Investors, Growth